There has been a decline in offshore banking activities as a result of some banks and investment organizations lowering the dollar usage restrictions for domestic banks. Foreign debt, which fell by 740 million US dollars in the most recent quarter from October to December, has been adversely impacted by this occurrence. In a report, Bangladesh Bank disclosed this information.
The report claims that the October–December period saw a reduction in foreign debt of 214 million dollars in government sector debt and 522 million dollars in private sector debt. Additionally, there was a notable 496 million dollar drop in buyers’ credit, which is a contract in which a foreign bank pays for an importer’s import expenses and the importer repays the money with interest within six months.
The banks in the country typically secure this type of loan from their limits with foreign banks. However, due to the ongoing dollar crisis, many foreign banks have reduced the dollar limits available to the country’s banks. Additionally, some foreign banks have severed relationships with certain local banks after not receiving import payments for several months. Industry insiders believe that this has significantly contributed to the reduction in buyers’ credit.
According to the Bangladesh Bank report, the total foreign debt balance reached $103.63 billion by the end of December last year. At an exchange rate of 122 taka per dollar, this translates to approximately 1,264.286 billion taka. Of this total, the government and its departments accounted for $84.21 billion in foreign debt, while the private sector’s debt stood at $19.42 billion. In comparison, the foreign debt balance was $104.37 billion in the previous September quarter, indicating a decrease of $740 million over three months. In September, the government and government institutions had a foreign debt of $84.42 billion, while the private sector’s debt was $19.94 billion.
In December, the cumulative total of long-term loans acquired from international sources by both the government and private sectors reached $96.9 billion, while short-term loans for these sectors amounted to $12.95 billion.
As reported by Bangladesh Bank, the total loans sourced from abroad by the end of the December quarter of 2023 were $106.4 billion. This indicates an increase of $3 billion, or approximately 3 percent, over the course of one year. Since the Awami League assumed power in 2009, the government has accumulated around $84 billion in loans over a period of 15 and a half years. The Sheikh Hasina administration faced a downfall on August 5, prompted by widespread protests from students and the public. Prior to this, as of July, the nation’s external debt stood at $103.79 billion.
